Tokio Marine : Agreement to Establish Insurance Joint Venture in Brazil(86.0KB)

January 7, 2020

Tokio Marine Holdings, Inc.

1-2-1 Marunouchi, Chiyoda-ku, Tokyo, 100-0005, Japan

Agreement to Establish Insurance Joint Venture in Brazil

Tokio Marine Holdings, Inc. (President and Group CEO: Satoru Komiya, "TMHD") announced today the execution of the definitive agreement to establish a Joint Venture to underwrite mortgage and homeowners insurance between its subsidiary, Tokio Marine Seguradora S.A. ("TMSR"), and Caixa Seguridade Participações S.A. ("Caixa Seguridade"), an insurance holding subsidiary of Caixa Econômica Federal ("Caixa"), a Brazilian state-owned bank and a leading institution on the Brazilian mortgage industry. TMSR's expected investment in the Joint Venture is BRL 1.52 billion (approximately JPY 39.5 billion*).

1. Background

1. As a global insurer, Tokio Marine Group has been focusing on expanding scale and profitability of its international business as the key growth driver of the overall group. We have been pursuing organic and strategic M&A initiatives in both developed and emerging markets in order to capture growth opportunities in the global insurance market and to further diversify our business portfolio.
2. Through a series of acquisitions, including the most recently announced acquisition of Privilege Underwriters, Inc., Tokio Marine Group has diversified its global portfolio in developed markets, especially focusing on specialty primary insurance business. We have also been actively seeking growth opportunities in emerging markets where we expect to see attractive mid-to-long term growth as seen in our recent acquisition of IAG's P&C business in Thailand and Indonesia as well as our minority investment in Hollard Group, which engages in both life and P&C business in South Africa and other Sub-Saharan countries.
3. Over the years, TMSR has been expanding its operations and improving profitability and is now ranked 5th in terms of market share in the Brazilian auto insurance market. Our Joint Venture partner Caixa is a state-owned bank that holds around 70% market share in the Brazilian mortgage loan market. TMHD is expected to further diversify its operations through the expansion into the growing mortgage and homeowners segments within the Joint Venture.

2. Joint Venture Structure Overview

1. Through Caixa Holdings Securitária S.A., Caixa will establish a new insurer entity and allocate new shares to TMSR equivalent to 50.01% of the insurer's voting shares upon the BRL 1.52billion (Approximately JPY 39.5 billion) capital contribution.
2. Along with the capital contribution, the new insurer will also issue the same amount of non- voting shares to Caixa Seguridade as the total outstanding voting shares. As a result, TMSR will hold 25% economic interest in the Joint Venture.
3. The Joint Venture is expected to initiate its operation by February, 2021. The closing of the transaction is subject to regulatory approvals among other conditions precedents.

1

3. Overview of Joint Venture

	(1)	Company name	To be determined
	(2)	Location of the head office	São Paulo (Brazil) [To be determined]
	(3)	CEO/Representative director	To be determined
	(4)	Main business activities	Insurance company
	(5)	Capital	To be determined
	(6)	Date of establishment	February, 2021 [To be determined]
	(7)	Major shareholders (%, voting	TOKIO MARINE SEGURADORA S.A.: 50.01%
		rights base)	CAIXA HOLDING SECURITÁRIA S.A.: 49.99%
	(8)	Relationship with TMHD	No notable capital or management or business
			relationship between the Joint Venture and TMHD
			or our affiliates. TMSR will own 50.01% of the Joint
			Venture's share and appoint four board members.
4. Overview of partner companies
	(1)	Company name	CAIXA ECONÔMICA FEDERAL
	(2)	Location of the head office	Brasilia (Brazil) with more than 3,300 branches in
			the country
	(3)	CEO/Representative director	Pedro Duarte Guimaraes
	(4)	Main business activities	Banking and financial services (i.e. financing to
			governmental infrastructure programs, general
			loans to individuals/private sector, mortgage
			loans, pension funds, etc). Largest Brazilian
			bank in terms of loan portfolio and deposits,
			with more than 90 million individual/corporate
			clients.
	(5)	Capital	BRL 36,419 million (as of Sep/2019)
	(6)	Date of establishment	Aug 12, 1969
	(7)	Net asset	BRL 87,149 million (as of Sep/2019)
	(8)	Total asset	BRL 1,299,260 million (as of Sep/2019)
	(9)	Major shareholders	Wholly owned by the Federative Republic of Brazil
		(ownership %)
	(10)	Relationship with TMHD	No notable capital or management or business
			relationship between this company or its affiliates
			and TMHD or our affiliates, except for the
			2

		insurance distribution agreement between this
		company and TMSR.
(1)	Company name	CAIXA SEGURIDADE PARTICIPAÇÕES S.A.
(2)	Location of the head office	Brasilia (Brazil)
(3)	CEO/Representative director	Marco Antonio Da Silva Barros (CEO)
(4)	Main business activities	Insurance holding company
(5)	Capital	BRL 2,757 million (as of Sep/2019)
(6)	Date of establishment	May 21, 2015
(7)	Net asset	BRL 4,965 million (as of Sep/2019)
(8)	Total asset	BRL 5,009 million (as of Sep/2019)
(9)	Major shareholders	Wholly owned by Caixa Econômica Federal
	(ownership %)
(10)	Relationship with TMHD	No notable capital or management or business
		relationship between this company or its affiliates
		and TMHD or our affiliates.
(1)	Company name	CAIXA HOLDING SECURITÁRIA S.A.
(2)	Location of the head office	Brasilia (Brazil)
(3)	CEO/Representative director	Marco Antonio Da Silva Barros
(4)	Main business activities	Insurance holding company
(5)	Capital	BRL 364 million (as of Sep/2019)
(6)	Date of establishment	May 21, 2015
(7)	Net asset	BRL 415 million (as of Sep/2019)
(8)	Total asset	BRL 422 million (as of Sep/2019)
(9)	Major shareholders	Wholly owned by CAIXA SEGURIDADE
	(ownership %)	PARTICIPAÇÕES S.A.
(10)	Relationship with TMHD	No notable capital or management or business
		relationship between this company or its affiliates
		and TMHD or our affiliates.

3

【Figure of Capital Relationship】

CAIXA ECONÔMICA FEDERAL

100%

CAIXA SEGURIDADE

100%

CAIXA HOLDING SECURITÁRIA

TMHD

100%

Tokio Marine & Nichido Fire

Insurance Co.,Ltd.

97.77%

(subject to change)

TMSR

Common Shares：49.99%		Common Shares：50.01%
Non-voting Shares：100%
		Joint Venture

5. Impact on financial results of TMHD

The establishment of the Joint Venture is expected to have limited impact on Tokio Marine group's consolidated business performance.

4